The Reserve Bank of India (RBI) on May 30, 2024 released its annual report for the financial year 2023-24. The number of frauds has increased nearly three times in the banking space in 2023-24, compared to the previous year. However, in contrast, the amount involved in these frauds has declined to almost half from 2022-23.

According to the RBI report, private sector banks have been reporting the highest number of frauds for the last three years. In 2023-24, there were 24,210 frauds reported by private sector banks, accounting for around 67 per cent of the total frauds in the year. It was 66 per cent in 2022-23 with 8,979 frauds reported by private banks.

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On the other hand, public sector banks fared well in reducing the number of frauds to 20 per cent of the total compared to 25 per cent the previous year. However, the amount involved in public sector banks’ fraud has been the highest at Rs 10,507 crore.

Primarily, digital banking, such as card, Internet banking, etc., has witnessed the most number of frauds, and loans and advances remained the top category in terms of fraud amount. It indicates that the frauds reported by the public sector banks mainly happened in their loan portfolio. Likewise, digital payment frauds were mostly reported by the private sector banks.

Important banking fraud facts for 2023-24

Total Frauds:

Total number of frauds – 36,075 (Almost three times from previous year)

Total Fraud Amount – Rs 13,930 crore (46.1 per cent decline from the previous year)

Banks:

Highest Number of frauds in Private Sector banks – 24,210 (67.1 per cent of the total)

Highest fraud amount involved in Public Sector banks – Rs 10,507 (75.3 per cent of the total)

Category:

Category of operation with the highest frauds – Card and Internet (29,082 frauds)

Category of operation with the highest fraud amount – Advances (Fraud amount Rs 11,772 crore)

Although the highest fraud amount is in the loan and advance category, it is significantly reduced to 84.5 per cent of the total in 2023-24 compared to 94.5 per cent in 2022-23. The shift in fraud cases happened from advances to the digital banking category, which has increased from 1 per cent in the previous year to 10 per cent in 2023-24.

What Next?

To tackle fraudulent activities, RBI has been taking several measures, including running several awareness campaigns to improve financial literacy, guidelines for regulated entities to follow transparent practices to protect customers’ interests, and making the information available online for their knowledge enhancement.

RBI plans to set up a cyber range to improve cyber incident response and supervisory capability in banks, strengthen the regulatory framework, run campaigns in financial literacy, financial inclusion, while also enhancing awareness, and sensitising the public about fraudulent activities and the usual modus operandi by fraudsters.

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According to the RBI report, “Banks have also been advised to provide doorstep banking services, particularly for differently-abled and senior citizens.”

Digital banking is an area where awareness is needed among seniors as they are prone to cyber frauds more due to a lack of digital awareness and the evolving modus operandi of cyber thugs.